Daily Finances recent article on car loans quoted AIER Research Fellow Polina Vlasenko on the availability of credit. The section referencing Vlasenko's quote appears below.

Recently, as a sovereign debt crisis spread from Greece across the continent, the Libor rate has shot up to a 10-month high. The Libor dollar rate rose again Wednesday, hitting 0.5378%, up from 0.5363% on Tuesday. While this is nearly double last year's rate, it's still down substantially from the 4.8% it reached at the height of the global financial crisis in 2008.

"An increase in Libor is significant because it indicates some sort of change in the market, and banks are being more cautious," says Polina Vlasenko, research analyst at the American Institute for Economic Research in Great Barrington, Mass. "If this proves to be a sustained trend, something that will go on for a couple of months, then slowly all other interest rates will start creeping up. If banks in London are worried, then at some point banks in the U.S. will start worrying."

Vlasenko says one reason that Libor may be rising is that European governments are borrowing more money in the bond markets to pay their bills. That could cause the Libor rate to climb because liquidity is being removed from the market, so there's less left for private borrowers. If the increase is limited to that, she says, the rise in Libor could be a temporary problem without a lasting impact.

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